Ministry of Trade (MoT) is going to establish a new regulatory body for the purpose of supervising share companies.

The supervising organ that will commence work in the coming year is said to be equipped with the authority to control share companies even during their pre establishment stage.

Share companies engaged in the financial sector are doing well while others are struggling. Gashaw Debebe, Secretary General of Ethiopian Chamber of Commerce and Sectorial Association (ECCSA), attributes this to the fact National Bank of Ethiopia (NBE) makes a good control in the financial sector.

“The financial firms that are only established by several shareholders are registering achievements because NBE strongly controls the sector. The shareholders are also benefiting but still some companies have suffered from illegal activities like embezzlement,” he said.The Secretary General added, the sector is still in its infancy stage, thus it was a transition period.

Capital stated different difficulties are faced by share companies. The first difficulty it states is that disputes arise among share holders of companies that are under formation or already established. The newspaper further states most recently established share companies managed to collect a lot of money via public offering yet they failed to keep the promises they made. Even worse some founders flee with the money they collected from share holders.

Another problem being faced by share companies emanate from the 1960 Commercial Code and the lack of a direct regulatory body. Thus, the government is going to issue a new legal frame work and establish a regulatory body.

Commenting on this Gashaw said, “We have information that the ministry is establishing a regulatory body to control the other share companies (exchanging financial firms) that did not previously formally exist,”

Source: Capital